Eye on the Regulations: The Argument Against ACO Exclusivity

In an ACO, participating physicians, hospitals and other healthcare providers use a coordinated approach to provide improved care to beneficiaries. As an incentive to participate in ACOs, Medicare shares its savings when participating providers coordinate to provide quality care while spending Medicare dollars more wisely.

The Centers for Medicare & Medicaid Services (“CMS”) have determined that a certain amount of exclusivity is necessary for an ACO beneficiary to be accurately assigned to an ACO. Exactly how much exclusivity is necessary has been the topic of much debate. Initially, lawmakers envisioned that only primary care physicians were required to be exclusive to their ACOs. After the public had the opportunity comment on the proposed law, the rule was changed. Now, it is generally accepted that if CMS assigns an ACO beneficiary to an ACO because of primary care services previously supplied by the physician, then the physician must be exclusive to the ACO. This is true whether the physician is a primary care physician or a specialist who provides primary care services to a patient with no primary care physician.

CMS’ interpretation how and when a physician must be exclusive to an ACO is simply not supported by the plain language of the law. The regulation sets forth that each ACO participant number upon which beneficiary assignment is dependent must be exclusive to the ACO “for purposes of Medicare beneficiary assignment.” This language differs from the final rule, which states that each ACO participant upon which beneficiary assignment is dependent must be exclusive to the ACO “for purposes of the Shared Savings Program.”

Although the difference in language is subtle, it is key. The actual law is much narrower than the final rule (and CMS) would lead one to believe. The plain language of the regulation, as currently written, only locks a physician, whether primary care or specialist, into one ACO for purposes of Medicare beneficiary assignment. This narrow exception does not strictly prohibit a specialist from participating in several ACOs and sharing in the savings of each. It merely means that the physician must pick an ACO under which it will receive all of its ACO beneficiary assignments from CMS. And that makes sense. CMS must know which ACO to assign a beneficiary to for primary care services to ensure the accurate assignment of beneficiaries to one and only one ACO.

That argument, however, may be academic. CMS’ interpretation of ACO exclusivity follows the language of the final rule, not the law. In its FAQs, (available HERE), CMS sets forth the blanket assertion that “an ACO participant TIN that bills for primary care services must be exclusive to a single Medicare Shared Savings Program ACO.” There simply has not been enough pushback that broad assertion is not supported by law.

Those specialists considering whether or not to become “participants” in an ACO are well-served to note that participating in an ACO does not necessarily translate into receiving a bonus payment for shared Medicare savings. On January 30, 2014, HHS released a press statement that while 54 of the 114 ACOs that began participating in 2012 had lower than projected expenditures in their first 12 months, only 29 saved enough money to generate a bonus payment to be shared amongst ACO participants.

Specialists who would like to gain the benefit of referrals from ACO-participating primary care physicians may choose to become affiliated with the ACO as an “other entity”. The ties of such an affiliation are dictated completely by the contract between the ACO and the “other entity.” And although these “other entities” are not able to participate in any shared savings, they are allowed to affiliate with more than one ACO and receive the benefit of referrals.